Thiesse's Thoughts

Feb 10, 2004

DC REFLECTIONS

This past week I spent four days in Washington, DC, not addressing agriculture issues, but representing the Minnesota School Board Association on federal issues and funding for public education. I could devote this discussion to public education issues; however, I would like to take to focus back to ag issues. While I was in the Nation’s Capitol, President Bush released the details of his 2005 federal budget proposal, we had a presidential primary in seven states, and evacuated the U.S. Senate Buildings due the presence of Ricin, a very toxic and deadly substance. Again, we could discuss all of these items, but I want to highlight the President’s budget proposal and the impacts for agriculture.

I have read several analysis pieces regarding the president’s proposed budget and the impacts for agriculture. Sometimes the professional analysis pieces are so different and diverse that you wonder if the writers were reviewing the same budget information and facts. Here is an example of two pieces written by highly regarded agriculture professionals:

“President Bush’s proposed 2005 budget calls for $82 billion in spending on USDA programs, which is an increase of $4 billion (approx. 5%) over the 2004 budget. The proposed USDA budget includes $47.9 billion for domestic food assistance programs and $20.8 billion in discretionary spending. The 2005 budget maintains the farm commodity programs as outlined in the 2002 Farm Bill, with spending projected at $12.6 billion. The President’s budget adds money for two important issues related to agriculture, which are $381 million for the Food and Agriculture Defense Initiative in Homeland Security and $952 million for the Food and Safety Inspection Service, including $60 million for BSE research and education.”

“Despite spending increases in food safety and Homeland Security, USDA will take the biggest hit of any Cabinet Department under President Bush’s proposed 2005 budget. Authority for discretionary funding in 2005 will decline by more than 8%, approximately $1.7 billion, compared to 2004 spending levels, and 12% lower than 2003. The President’s proposed budget will also cut rural development programs by $244 million compared to 2004 and $560 million compared to 2003, and would cut funding for agricultural research by $64 million in 2005. There also cuts in the “Food For Peace” Program”.

Sounds like they read different budget proposals. Which is right? Both of the analysis pieces appear to contain viable information and the figures quoted appear to be accurate. The difference is because the writers have chosen to put a different spin on the proposed Federal budget information and data. Many writers on agricultural issues or other issues represent a group, organization, or business, which has a policy platform. So, in this case, writers analyze the President’s proposed 2005 Federal budget according to the policy priorities and fundamentals of the group, organization, or business that they represent. Even though the rhetoric may sound completely different, both overviews of the proposed 2005 Federal budget offer some interesting insights. It will be interesting watching Congress sort through this process to reach a final 2005 Federal budget.

CHANGES IN CHINA

Lots of things have changed in the world in the past 25 years. However, one of the more dramatic changes has been in China and the trade relationship between the U.S. and that country. China’s population has grown 33% since 1979, from 975 million to more than 1.3 billion people. Twenty five years ago, there were no private automobiles in China and they imported no oil, but today there are more than 3 million privately owned automobiles and China imports more than 2 million barrels of oil each day. Annual U.S. trade with China has grown from $2.3 billion per year to more than $177 billion annually in the past 25 years. In 1979, the U.S. had a trade surplus of $1.1 billion with China; however, by 2002, the U.S. had a $123 billion trade deficit. China has become a major customer for grains, meat and many other agricultural products produced in the U.S. We can expect to hear a lot more about China and its trade relations with the U.S. in the coming years.

Editors note: Kent Thiesse is a former University of Minnesota Extension educator and now is Vice President of MinnStar Bank, Lake Crystal, MN. You can contact him at 507-726-2137 or via e-mail at [email protected].